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A little known provision included in the healthcare law includes a new tax for health insurers. Beginning in 2012, insurers will be required to pay $1 per member as a means to finance comparative effective research. This fee rises to $2 in 2013.

The goal of comparative effectiveness research is to determine which procedures and approaches to health management achieve the most successful and cost effective results. Does medicine A produce better results than medicine B? Does one procedure outperform another procedure? Do differences exist by geographic region? By population segment? By medical school? By insurance company?

These are all of course good questions that should be answered, and a tax of dollar or two doesn’t sound so bad to pay for the research. Understanding which medications and procedures produce the best and most cost effective results would provide enormous help in controlling health costs.

Now to be sure private industry already conducts comparative research. But a general distrust of insurance companies and the inevitable pushback from plan participants (and from politicians) of any suggestion to change or limit choice diminishes the potential investment. It’s driven by profit margin, many say.

Now Obamacare charges the duty to the federal government. Makes sense. After all, federal officials don’t make decisions based upon profit margins, right? They have no interest in steering patients to specific hospitals or to replace higher cost medications with lower cost alternatives, do they? They wouldn’t limit choice or procedures based upon cost, would they?

Comparative effectiveness is important. It’s necessary. And it’s integral to the survival of the U.S. healthcare system. Insurance companies have pursued their own research for years. Now the federal government will lead the way. The question is this. What will the government do with the research?

The debate over the Patient Protection and Affordable Care Act (PPACA) may have divided Congress and even theelectorate, but some areas of law have bi-partisan support. One such area is the promotion of wellness initiatives.

It’s no secret that health costs in the United States have been increasing faster than wages or inflation for many years. We’re on an unsustainable track. But a close look at actual claims shows that as much as 75% of expenditures go toward the care and treatment for chronic illnesses like cancer, heart disease, asthma, blood pressure and cholesterol problems and the biggest one, obesity. It’s been said that obesity is an epidemic in the Unites States and poor weight management can be blamed for a number of these other chronic illnesses.

But here’s the point. Chronic diseases are often preventable, and if not, they’re at least controllable in most cases. While many can point to genetics and heredity as root causes of disease, it’s obvious that lifestyle choices like smoking, alcohol abuse, poor eating habits, and lack of exercise are main causes for many people.

Promoting wellness as a means to change behavior isn’t a new concept, but provisions in PPACA will encourage better practices in this area. For starters, small employers will be eligible this year for grants to launch wellness initiatives. The program will offer up to $200 million to employers with fewer than 100 full time employees who did not have a wellness program in place when the law passed on March 23, 2010. Details have yet to emerge, but the application process should be known by the end of the year.

Beginning in 2014 employers will be permitted to discount employee health premiums by as much as 30% for those who participate in wellness programs or for those who reach certain measurable health targets. The discount could be increased to as much as 50% at the discretion of Secretary of Health and Human Services. These allowances should encourage employers to support employees with wellness initiatives, which in turn could reduce health costs.

The Centers for Disease Control and Prevention will be tasked with providing technical support to employers as a means to assist employers launch and manage their programs. Additionally, CDC will be responsible for reporting back to Congress about best practices as means for improving the law’s allowances.

The debate over PPACA is far from over. Litigation, new legislation, funding, all are issues that could derail portions of the law or even the law itself. But regardless of the outcomes here, it would be nice to see some true successes result from the practical wellness approaches included in the law. We just might see some lower costs if we can get ourselves off the couch. Fat chance?

To date five district courts have ruled on the individual mandate. Three courts have upheld the law, Eastern Michigan, District of Columbia, and Western Virginia. And two courts have struck it down: Eastern Virginia, and Northern Florida.

Next up are the Courts of Appeal. There have been two decisions so far with the Sixth Circuit upholding the Eastern Michigan case and the Eleventh Circuit agreeing with the Northern Florida court to strike down the law down.

Still to rule is the Fourth Circuit to settle the split decisions from the two Virginia cases. And the District of Columbia Circuit will hear its appeal in September.

If you’re scoring, that’s four courts to uphold the mandate, three courts to strike it down, two appeals still pending. The judiciary is split, some decided, ultimately undecided. But do any of these lower decisions really matter? After all, it was concluded with that fateful Christmas Eve vote in 2009 that the U.S. Supreme Court would decide the issue. So, in the meantime, aren’t we just following process and reading headlines?

Americans 18 and older and actively at work will be eligible to enroll. Employers who elect to participate will automatically enroll workers but workers will have the ability to opt out. With no exclusions for pre-existing conditions participation will be highly selective and the program will disproportionately attract unhealthy members.

The Congressional Budget Office estimated the monthly premium cost at $123 on average, yet according to a white paper released by The Cato Institute earlier this year premiums could actually be in the range of $180-$240. Cost will dissuade participants as will a requirement that premiums be paid for five years before benefits become available.

Cash benefits will be paid directly to a qualified participant who experiences a loss of at least two activities of daily living (ability to eat, dress, bathe, etc). Payments are expected to be no less than $50 per day on average and there is no provision to limit benefits on a lifetime basis.

Only 6% of the population is expected to enroll according to estimates provided by the American Academy of Actuaries. This number could be much lower given the voluntary nature of the program, the expense, and the five year vesting period.

The CLASS Act is doomed. Low participation and adverse selection will render the program unsustainable. The CBO is concerned it becomes “a new federal entitlement program with large, long-term spending increases that far exceed revenues.” and the bipartisanCommission on Fiscal Responsibility and Reform suggests a repeal if the program cannot be “reformed” in short order. Reform? The healthcare law was supposed to be reform! Repeal is better than reform, at least for the CLASS Act.

Just so I understand this correctly, we’re going to be “gifted” with a health care plan we are forced to purchase and fined if we don’t, which will cover approximately 10 million more people without adding a single new doctor.

It was written by a committee whose chairman says he doesn’t understand it, passed by a Congress that didn’t read it, and signed by a president who smokes.

At least we can take comfort in knowing that nothing can possibly go wrong, because the funding will be administered by a treasury chief who didn’t pay his taxes, overseen by a surgeon general who is obese, and financed by a country that’s already broke. Only in America.

Maternity benefits are eligible events in most short term disability policies. They fall under the illness schedule as opposed to the injury or accident schedule (even if the pregnancy occurred accidentally!) Policies begin to pay claims after a waiting period for either type of event. Payments for injuries or accidents usually begin before illness events. For example, a policy may offer income payments as of the first day of an accident while the policy may require a one week wait before payment for an illness. Waiting periods differ from policy to policy.

Under most policies, maternity claims are generally payable for a maximum of six weeks from the date of the delivery. This is standard industry practice based upon general medical guidelines. Complicated deliveries and extenuating medical conditions can of course allow for an extension of claims.

Here’s a quick class. If a policy requires a one week waiting period before payments begin, and if a participant stops working on the actual day of the delivery, then the plan will begin the waiting period on the date of delivery, which leaves the participant with only five weeks of eligible claims left of the six available. But considering many doctors send participants home for bed rest before the expected date of delivery, the maximum benefit changes. This is because the waiting period begins on the day the member is sent home as opposed to the date of delivery. For example, if the plan requires a one week wait, and if a doctor sends the member home one week prior to the delivery date, then the member has the opportunity to satisfy the waiting period while at home before the delivery date. The policy will then still pay the industry standard maximum of six weeks once the delivery occurs.

Similarly, if a participant leaves work four weeks early for bed rest due to doctor’s orders the policy will then pay a maximum benefit of nine weeks of claims. This is because the member satisfies the one week waiting period starting from the date the member went home. Claims payments then begin three weeks before the delivery date while the member remains unable to work at home. Once the delivery occurs the policy will still pay the industry standard maximum of six weeks once the delivery occurs.

To simplify…. just remember that maternity claims are generally paid for six weeks from the date of delivery. The policy waiting period starts as soon as the member takes leave. If the leave occurs before the delivery date, then the member receives more weeks of payment. If the leave occurs on the delivery date, then the member receives fewer weeks of benefit.

The Patient Protection and Affordable Care Act (PPACA) requires employers to report the value of employer-sponsored group health insurance on an employee’s annual W2 form. The amount to be reported in box 12 is considered non-taxable, at least for the time-being.

The law originally required employers to report this information beginning with the tax year 2011, but the IRS has postponedimplementation. Now, employers that file more than 250 W2 forms, measured by the preceding calendar year, are required to report the health cost beginning with tax year 2012 (reportable January 2013). Employers that file fewer than 250 W2 forms are required to report the health cost beginning with tax year 2013 (reportable January 2014).

In calculating the total reportable cost, the employer will combine the portions of the annual premium paid by the employer and the employee. The annual cost of dental or vision coverage is excluded unless such coverage is integrated with the health plan. Costs associated with contributions to a health savings account (HSA), Archer medical savings account (MSA), or flexible spending account (FSA), are also excluded from the total.

While postponing this reporting requirement gives employers some breathing room, the beginning of tax year 2012 is just around the corner. Larger employers must have a system in place to begin tracking and recording employee health plan costs by January. Smaller employers have an additional year. Time is short. Are you prepared?

See IRS Notice 2011-28Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage for more detail.

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